A high degree of risk awareness needs to be exercised with regard to the servicing of new SMSF audit clients resulting from the amended auditor independence standards as defined by APES 110, a leading practitioner has said.
Saul SMSF founder David Saul said this level of caution was necessary among audit firms to guard against accepting new clients with questionable compliance histories now uncovered as a result of the change to the practitioner code of ethics.
“We noticed there [has been] a lot of opinion shopping over the last 18 months in term of firms that had done their audits internally and they [have been] really cautious about who they [felt comfortable] to take on their [existing] client relationships,” Saul told attendees at the most recent SMSF Association Sydney Chapter function.
“I can tell you [we’ve been] equally cautious about [which clients] we accepted and didn’t accept because we’ve come across some really interesting scenarios where these firms had sat on their funds, audited them internally and now [have had to] expose them to the real world,” he added.
According to Saul, the standard of the SMSF audits conducted to date by some accounting firms is not the only issue at hand when looking at client transfers.
“There have been cases where we’ve [rejected] firms [and] told them they just don’t meet our standards and their expectations are [unrealistic]. They expect everything for nothing and then they want you to pass the rubbish that they’ve put before you,” he said.
“There have probably [been] about three or four of those inquiries that we’ve had in the last year we’ve walked away from.”
On a positive note Saul revealed he is experiencing greater engagement with trustees themselves who have demonstrated the seriousness with which they are approaching running their own super fund.
“Increasing [we’ve been having] individual trustees call us and they’ll inquire about what their duties and responsibilities are or they’ll inquire about issues we might have raised. I find that really [leasing,” he said.
